U.S. Dollar Extends Losses on Dovish Fed; G-20 Summit in Focus

Investing.com - The U.S. dollar extended losses on Monday in Asia after trading lower for three straight sessions as the U.S. Federal Reserve signalled it was prepared to cut interest rates later this year to counter a global economic slowdown, exacerbated by global trade tensions.

The U.S. dollar index that tracks the greenback against a basket of other currencies was down 0.1% to 95.643 by 1:18 AM ET (05:18 GMT).

The focus this week will be whether Washington and Beijing can resolve their trade dispute at an upcoming summit in Japan of leaders from the Group of 20 leading world economies.

U.S. President Donald Trump and Chinese President Xi Jinping have both confirmed that they will be meeting each other at the summit to discuss trade-related issues.

However, just a few days ahead of the summit, the U.S. put five more Chinese tech entities on a trade, raising uncertainty of whether a trade deal could be struck.

In China, the country’s state-run People’s Daily said in an editorial Saturday that Beijing will “fight to the end” if Trump and his administration persists with continuing the trade war.

The U.S. must drop all tariffs imposed on China if it wants to negotiate on trade, the newspaper said. It “must show some good faith, take account of key concerns from both sides and cancel all tariffs,” the paper said.

Meanwhile, the AUD/USD pair gained 0.5% to 0.6954. Australian central bank chief Philip Lowe on Monday casted doubt on how effective a new round of monetary policy easing would be in supporting global growth.

“But if everyone is easing, there is no exchange-rate channel,” the Reserve Bank of Australia governor said. “We trade with one another, we don’t trade with Mars, so if everyone’s easing, the effect that we get from exchange-rate depreciation via the transmission mechanism isn’t there.”

The yen, which often serves as a safe haven in times of political angst, fell against the dollar today even after tensions grew between Iran and the U.S.

The USD/JPY pair last traded at 107.43, up 0.2%.

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